MARKET STUDY
Scotia Bank, United Kingdom
Prepared for:
BICG9303 International Market Research
Professor Dawit Eshetu
Prepared by:
Ayesha Kadiwal
Bhrigu Bagga
Monique Duncan
Martin Muriungi
17th April 2023
Table of Content
Your table of content should be automatically generated using the reference function in word.
Also, it should outline all contents suggested in this guide (i.e. the eight sections)
1.
EXECUTIVE SUMMARY
Scotiabank, a multinational bank, plans to enter the UK market. The UK is a highly developed
economy with a strong financial services industry and a stable political environment. The
country analysis matrix suggests that the UK has a favorable business environment, making it an
attractive destination for foreign investment.
The target market for Scotiabank in the UK is the retail and commercial banking sector. The UK
retail banking market is highly competitive, dominated by major banks such as Barclays, HSBC,
Lloyds, and RBS. The commercial banking sector in the UK is also highly competitive, with
several players vying for a share of the market.
The banking industry in the UK is highly regulated, with strict rules and regulations governing
the operations of banks. However, the market size for banking products and services in the UK is
significant, with a large and growing customer base.
Political risk in the UK is low, with a stable political environment and a transparent regulatory
framework. Commercial risk is moderate, with intense competition and potential challenges in
establishing a foothold in the market. Currency risk is also a factor to consider, given the
volatility of exchange rates.
Scotiabank will face competition from established players such as Barclays, HSBC, Lloyds, and
RBS, as well as other international banks that have a presence in the UK market. To succeed,
Scotiabank will need to differentiate itself by offering innovative products and services and
providing superior customer service.
2.
Business Definition
Scotiabank is a Canadian multinational bank that offers a range of financial services to its
customers, including personal and commercial banking, wealth management, corporate and
investment banking, and global banking and markets. The bank operates in multiple countries,
including Canada, the United States, Mexico, and various countries in Central and South
America, and has a strong focus on building long-term relationships with its clients. Its core
values include customer focus, respect, integrity, diversity and inclusion, and social
responsibility. Scotiabank's mission is to help its customers become better off by providing them
with financial solutions that meet their unique needs and help them achieve their goals.
Key Partners:

Suppliers and vendors who provide technology, equipment, and materials for the bank's
operations.

Other financial institutions and regulators who collaborate with Scotiabank to ensure
compliance with regulations and standards.

Strategic partners who help the bank expand its reach and offer new products and
services.
Key Activities:

Providing a range of financial services to individuals, small businesses, and large
corporations, including banking, investment, and insurance products.

Marketing and advertising its products to attract and retain customers.

Conducting research and analysis to identify new opportunities and improve its services
and processes.

Developing and maintaining relationships with customers and partners.
Value Propositions:

Convenience and accessibility: Scotiabank offers a range of digital and physical channels
for customers to access its services.

Expertise and guidance: The bank's experienced advisors and wealth management
professionals offer personalized advice to help customers achieve their financial goals.

Diversified products and services: Scotiabank provides a range of banking, investment,
and insurance products to meet the diverse needs of its customers.
Customer Relationships:

Personalized service: Scotiabank's advisors build relationships with customers and offer
personalized advice and support.

Efficient service: The bank aims to provide quick and efficient service to its customers
through its digital channels and physical branches.

Continuous communication: Scotiabank keeps its customers informed about new
products and services, and any updates or changes that may affect their accounts.
Customer Segments:

Retail banking customers: Individuals and families who require banking and financial
services for personal use.

Small and medium-sized enterprises: Businesses that require banking, lending, and
investment services to help them grow.

Corporate and commercial banking customers: Large corporations and institutions that
require specialized financial services, such as cash management and trade finance.
3.
COUNTRY SELECTION
For the country selection matrix we looked at six criteria and each has 3 sub sections with ratings
which suggest the importance of each criteria. They are as follows:
1) Cost of doing business & market potential- These criterias hold immense importance for a
business to identify its initial and concurrent expenditures during their international expansion.
In this case, banks have a vast market potential, as they provide financial services to a broad
range of customers. From individuals to large corporations, banks play an essential role in the
financial industry, and their potential market is extensive. For this criteria we looked at World
Bank’s doing business index and divided the section into three parts: a) cost of registering firm
b) Time taken for registering the firm and c) Total tax contribution rate. For determining the
market potential we looked commercial banking market size, number of branches, percentage of
account ownership at a financial institutions.
2) Risk profile & availability of labour skills- Managing risk and ensuring the availability of
skilled labor are critical factors for banks to succeed in the financial industry. Banks must be
proactive in managing their risk profile and recruiting and retaining staff with the right skills to
meet their business needs. For both of these we looked at the political, economic, operational
risks that Scotia may face in the countries.
3) Quality & Quantity of Infrastructure and easy of doing business- Quality and quantity of
infrastructure and the ease of doing business are crucial factors for banks. A modern and wellfunctioning infrastructure, coupled with a favorable business environment, can help banks
operate efficiently, reduce costs, and expand their business. The matrix looks like access to
internet, number of branches, size of banking center, affordability, currency and brand
recognition.
Looking at the numbers, United Kingdom has come up as the country for our analysis (country
selection matrix attached in the appendix).
4.
TARGET MARKET
The UK banking market is dominated by large established banks such as Barclays, HSBC,
Lloyds, and RBS. These banks offer a wide range of banking products and services to
individuals and businesses, including savings and current accounts, loans, mortgages, and
investment products.
Despite the dominance of established banks, there are opportunities for new entrants to enter the
UK banking market. In recent years, the UK government has encouraged competition in the
banking sector through various initiatives such as the Open Banking initiative, which allows
customers to share their banking data securely with other banks and financial service providers.
This has created opportunities for new fintech companies to enter the market and offer
innovative financial products and services to customers.
Moreover, the COVID-19 pandemic has disrupted the banking industry, and this has led to
changes in consumer behavior and preferences. There has been a significant increase in online
banking and digital payments, which has created opportunities for banks to offer new digital
services to customers.
In summary, the UK banking market is highly competitive, but there are opportunities for new
entrants, especially those with innovative digital services. However, the success of any new bank
in the UK will depend on various factors, including regulatory requirements, market conditions,
and customer preferences.
4.2
INDUSTRY CHARACTERISTICS IN THE TARGET MARKET
Scotiabank's entry into the UK market must consider various factors that affect demand for its
services. The UK is a culturally diverse country with a strong banking sector, making it an
attractive market for international banks. However, there are certain modifications that may be
required for Scotiabank to match local preferences.
One modification that could be made is to make the services more affordable, as the UK is a
highly competitive market with many established players. Scotiabank may need to modify its
product features to appeal to UK customers' preferences. For instance, UK customers value
personalized banking services and may prefer banks that offer more convenient and accessible
digital banking options. Scotia bank may need to modify its services to include features that cater
to these preferences.
Language also plays a critical role in product/service modifications. Scotia bank may need to
adjust its labelling, instructions, and after-sales service to suit the UK market. Technical
specifications of the product may require modifications to meet UK banking standards and
regulations.
Environmental considerations are also important in the UK, and Scotia bank may need to ensure
that its services meet UK regulations and standards in terms of emissions, reusability, and
disposability. It must also ensure that its technology used is appropriate and can be readily
maintained in the UK market.
Scotiabank must also consider intellectual property protection, as the UK has a robust legal
system for IP rights protection. The technology used by Scotiabank should not challenge any
patents in the UK market, and it should ensure that any embedded IP is adequately protected.
In summary, to be successful in the UK market, Scotiabank must modify its services to match
local preferences and regulations. It must ensure that its services are affordable, personalized,
and easily accessible, and that its technology is appropriate for the UK market. It must also
comply with UK regulations and protect its intellectual property rights.
4.3
MARKET SIZE OF PRODUCT/SERVICE IN THE TARGET
MARKET
The banking industry in North America is a highly competitive and dynamic sector that plays a
vital role in the region's economy. The industry includes a wide range of financial institutions,
from large multinational banks to smaller community banks and credit unions. As Bordo et al.
(2015) share, the North American banking industry is dominated by a few large banks,
commonly referred to as the "Big Five" in Canada and the "Big Four" in the United States. In
Canada, the Big Five banks are the Royal Bank of Canada, Toronto-Dominion Bank, Bank of
Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce (Similar Web, 2023).
The Big Four banks in the United States are JPMorgan Chase, Bank of America, Wells Fargo,
and Citigroup (Bordo et al., 2015). Beyond the dominance of these few banks in both Canada
and America, many other banks are smaller in size, that cater to the need of a smaller niche
market, that is differentiated mainly according to geographical region. As Bayoumi (2017)
shares, these smaller institutions tend to cater to the needs of specific communities, and they can
also provide more personalized services within these specialized markets.
4.3.1 Emerging Future Trend
The North American banking industry has faced significant challenges in recent years, including
increased regulation and competition from fintech startups. Accordingly, banks have been forced
to evolve, to adapt to changing market conditions, with special emphasis being placed on
innovation and customer service. Part of this revolution has seen financial institutions in Canada
invest heavily in technology, to meet an increasingly mobile-first customer base. More
specifically, Scotiabank's annual report for 2022 notes that the bank has implemented multiple
state-of-the-art electronic trading tools including Scotia TranXact for business payment,
iTRADE mobile app for Wealth customers, and ScotialZero in Chile which aims to be the first
free, 100% digital chequing account in the market (Annual Report, 2023).
Overall, the growth prospects for mobile banking in Canada are quite positive with increasingly
more Canadians adopting digital banking, and abandoning traditional forms of banking. One
survey conducted by the Canadian Bankers Association revealed that mobile banking adoption
among Canadians increased by 17% between 2018 and 2020 (De Leon et al., 2020).
Additionally, the rise of the COVID-19 pandemic also prompted the accelerated adoption of
digital banking, with Canadians choosing to bank from the safety and convenience of their
mobile devices. Scotiabank Annual Report (2022), most recent results also show that over 50%
of retail banking sales, while over 90% of all banking transactions are self-serve transactions,
mainly facilitated by considerable investments in technology.
4.3.2 Current Digital Products and Services
As Wewege et al. (2020) share, migration to digital banking has seen the reorganization of
multiple banking functions including the provision of financial advice, modernizing payment
technology, and increasing the use of artificial technology. This growing trend has also seen all
five of the big banks in Canada commit to investing significant sums of money in improving
their online platforms. The Scotiabank factsheet shares, that fast-tracked digital adoption saw the
value of digital transactions rise to 59% in Q1/23 (Scotiabank, 2023). Moving forward, it is
expected that more customers will shift to such digital platforms, and this will be driven mainly
by younger generations, who have grown up with technology, and are more proficient at using it
for banking and other aspects of their life. As these younger generations become the primary
customers of banks in the future, mobile banking will likely become even more popular.
4.4 RISKS (POLITICAL, COMMERCIAL AS WELL AS CURRENCY
RISK)
4.4.1 Political Conditions
Banking in Canada is subject to a myriad of political risks similar to all other industries in the
country. The nation boasts a fairly stable and predictable political environment, and this makes
the nation an attractive destination for foreign investments. Yet, the country still experiences
multiple political risks which can affect the banking industry including an uncertain global
economy, and geopolitical tensions. More specifically, recent trade disputes between Canada and
the United States have contributed to increasing tensions in the banking industry and the larger
business environment. Moreover, As Annual Report (2023) shares, recent political tensions in
Europe between Ukraine and Russia have led to increased risk of currency exchange rate and
interest rate fluctuation.
According to the company’s annual report, various classes of Scoiabank’s assets that were
denoted in foreign currencies, including debt, securities and future cash-flows were all exposed
to financial losses associated with risks related to changes in currency exchange rates. However,
the bank was able to mitigate these risks through various strategies including maximizing the
net-trading position, stress testing, hedging foreign exchange positions, and the purchase of
derivatives. Overall, Canada remains a democratic country, with a constitution in place to
determine various aspects of the society. Such a setting ensures that political risks within the
business environment are kept to a minimum, helping to provide a relatively stable environment
for businesses to thrive. Within the Canadian context, historical performance, and forecasted
earnings all show strong growth positions for Scotiabank, which remains an important indicator
of effective risk management strategies by the financial provider.
Figure 1 below shows the growth curve for both the diluted EPS and dividends paid for the
decade that ran from 2012 to 2022.
Figure 1: Scotiabank 10-Year EPS and Annual Dividend
As seen in the projections above, the bank maintained a steady CAGR of 4% on Diluted EPS for
the period, while the annual dividends paid out also grew at a CAGR of 6% within the same
period (Scotiabank, 2023). Both these performance indices pointed to sustained profitability by
the bank including in the 2019 – 2022 period when the world was grappling with harsh economic
conditions occasioned by Covid-19.
4.4.2 Regulatory Barriers
Banks operating in the Canadian market were also subject to significant regulatory risk
occasioned by extensive regulation within their different jurisdictions. As Tarullo (2019)
explains, regulatory risks are occasioned by the unintentional failure of financial institutions to
comply with the various legal and regulatory requirements set by the assigned regulatory bodies.
As Annual Report (2023) shares, Scotiabank continues to monitor changes in regulatory
guidance from the various regulators that apply in the Canadian banking industry to continually
assess the impact of new regulations across its credit-life cycle. For instance, Canadian banks
have been subject to a raise in the capital requirement, which increased from 10.5% of all
deposits to 11% of deposits, effective February 2023 (Annual Report 2023). While a raised
capital requirement remains advantageous to the banking industry, it also means that individual
banks face restrictions about the amount of money they can lend to clients, from the available
deposits. Nevertheless, Scotiabank notes that it does not tolerate regulatory risk, but rather
complies strictly with such guidelines, as an assured strategy for continued operations as a going
concern (Annual Report, 2023).
4.5 COMPETITION - COMPANIES AND PRODUCTS/SERVICES IN THE
MARKET

HSBC
HSBC Holdings plc is a multinational banking g and financial services company with its
headquarters in London. It is the UK’s largest bank, and one of the world’s top 10 banks in terms
of assets and market capitalization. HSBC employs over 218,000 people worldwide through
2,700 branches and providing a wide range of products and services for over 40 million
customers.

Barclays
Operating in over 40 countries, Barclays plc, is a customer and whole sale bank with its
headquarters in London. With over 82,000 employees it offers ranges of consumer, investment,
corporate and private banking services to about 24 million customers. The Company operates
through two principal business divisions, 1, Barclays Bank UK PLC 2, Barclays international.

Lloyd’s Banking Group
Lloyd’s Banking group is the third largest banking group in the UK in terms of assets. The
company's main business lines are retail and commercial banking, corporate banking, life and
non-life insurance, and pension and investment services. The Group's subsidiary includes Lloyds
Bank, Bank of Scotland, Halifax, Scottish Windows, Lloyds Development Capital, Agriculture
Mortgage, among others.
SWOT Analysis

Strengths of Scotiabank
Extensive Network: The bank has more than 89,400 employees at 2,000+ branches in Canada &
North America, the company opened its first retail branch in London, England in 1920 and now
have about 430 employees, making Scotiabank the 19th largest bank in the world.
Wide Range of Portfolio: The variety of personal banking and financial services the bank offers
acts as one of their strengths wherein they can be benefited from various offerings.
Brand Reputation: Scotiabank has been in the business of banking for a large number of years.
Also, with the variety of secure services, it provides such as Scotiabank’s Digital Centre which is
backed with secured digital channels to provide its users to securely transact with Scotiabank.
These big steps made Scotiabank established as a leader in the industry. This helps the
corporation to gain a reputation and get recognized easily.
Strong Digital Marketing Strategy: With a very strong online presence on every social media site
has built a strong customer relationship. Social media has enabled Scotiabank to increase
recognition, to interact and connect with its customers on a daily and more extensive basis.
Goods Returns on Capital Expenditure: Scotiabank is relatively successful at executing net
income of CA$9.96 Billion from annual revenue of CA$31.25 Billion.

Weaknesses of Scotiabank
Limited Success Across the Core Business: Although Scotiabank is one of the leading
organizations in its industry it faces challenges in moving to other product segments with its
present culture.
Cash Flow Problems: There is a lack of proper financial planning at Scotiabank regarding cash
flows, leading to certain circumstances where there isn’t enough cash flow as required leading to
unnecessary unplanned borrowing.
Need to Invest More in New Technologies: According to the country’s scale of expansion and
the geographical areas Scotiabank needs to invest more money in technology to integrate the
processes across the board. Currently, the investment in technology is not on par as per the vision
of the company.
Customer Service: Improper customer service, long wait time for customers service, as well as
lack of solving customer queries, can cause a negative image of the brand. This can either be
through mouth publicity or by any other means.
Depend on Canada & US: Scotiabank’s global presence is not up to the mark. The bank is
dependent more on Canada & US. Also, Scotiabank lags behind the top Canadian and UK banks
in terms of several branches.

Opportunities of Scotiabank
Several Acquisitions: The bank amalgamated with several other Canadian financial institutions
through the years will support Scotiabank to grow the credit card business in the US and Canada
which will ultimately lead to growth in customer base.
More Expansion in the US: Creating the network of retail banks in the US will help the bank to
expand in the US. Also, Scotiabank’s wealth and insurance business in the US will become one
of the huge opportunities for the whole company.
New Clients from Online Channels: The company has invested a significant amount of money in
the internet platform during the last few years. This speculation has provided Scotiabank with a
fresh deal channel. In the coming years, the company may take advantage of this opportunity by
better understanding its customers and meeting their needs through massive data analysis.
Moderate Growth Rate: Following a moderate growth rate in the business, a financial uptick and
increase in client spending provide an opportunity for Scotiabank to attract new clients and
increase its share of the total industry.
Development of Technology: Since the FinTech industry is growing at a very rapid pace, there
are advancements in technologies too. Using these kinds of technologies can increase efficiency
and decrease cost.

Threats to Scotiabank
Regulatory Charges: The bank belongs mainly from North America and Scotiabank is mainly
focusing on expanding its business more in the United States. While taking advantage of this the
government can charge regulatory fees for the same.
Competitor Technical Advancements: New technological advancements by a few competitors
within the sector constitutes a threat to Scotiabank since customers who are drawn to this new
technology may switch to competitors, reducing Scotiabank’s overall market share.
Pandemic: Financial losses incurred by companies as well as individuals can cause a threat to the
bank in repayment of loans.
Increased Marketing Efforts: Due to the rise of digital marketing, there is an increasing number
of promotional messages which are being sent by competitors. It clutters up the space, which
leads to losing out on customers. Scotiabank is well versed and trying to adopt a variety of the
latest digital marketing skills to get ahead of the competition. You must also check out these
skills to achieve the same.
Rising Controversies: Scotiabank has been in several controversies as recently in 2013
Scotiabank got a $100M wrongful dismissal lawsuit for committing securities regulatory
violations. Such controversies if continued can negatively affect the business of Scotiabank.
5.
CONCLUSION AND RECOMMENDATION
It is our conclusion that the United Kingdom has the potential of being a canvas of productive
opportunities, once the considerations of the mission, vision, PEST and SWOT analysis’ are
kept in decision making this Market can be Penetrated.
We recommend that the use of the Ansoff’s Matrix can aid in the penetration of this market,
where it focuses on selling its existing products in the existing market on a larger scale to build a
more profound customer base and increase market share.
6.
REFERENCES
https://www.advratings.com/europe/foreign-banks-in-the-uk/scotiabankuk#:~:text=Scotiabank%20in%20the%20UK&text=The%20company%20opened%20its%20first
,more%20than%202%2C500%20offices%20worldwide.
http://nclibraries.niagaracollege.ca/citations
Annual Report. (2023). Scotiabank 2023 Annual
Report. https://www.scotiabank.com/content/dam/scotiabank/corporate/BNS_Annual_Re
port_2022_v1.pdf
Bayoumi, T. A. (2017). Unfinished business: the unexplored causes of the financial crisis and
the lessons yet to be learned. Yale University Press.
Bordo, M. D., Redish, A., & Rockoff, H. (2015). Why didn't Canada have a banking crisis in
2008 (or in 1930, or 1907, or…)?. The Economic History Review, 68(1), 218-243.
De Leon, M. V., Atienza, R. P., & Susilo, D. (2020). Influence of self-service technology (SST)
service quality dimensions as a second-order factor on perceived value and customer
satisfaction in a mobile banking application. Cogent Business & Management, 7(1),
1794241.
Scotiabank. (2023). Investor Fact Sheet Q1 2023. Scotiabank Global
Site. https://www.scotiabank.com/content/dam/scotiabank/corporate/quarterlyreports/2023/q1/Q123_Scotiabank_Investor_Factsheet.pdf
Similar Web. (2023). Top 10 scotiabank.com Competitors.
similarweb.com. https://www.similarweb.com/website/scotiabank.com/competitors/
Tarullo, D. K. (2019). Financial regulation: Still unsettled a decade after the crisis. Journal of
Economic Perspectives, 33(1), 61-80.
Wewege, L., Lee, J., & Thomsett, M. C. (2020). Disruptions and digital banking trends. Journal
of Applied Finance and Banking, 10(6), 15-56.
7.
APPENDICES
Country Selection Matrix
Business Canvas